Five things you need to know this week - 09 December

By Drew Meredith.

1. The Financial Planning Association has broadly supported the Australian Law Reform Commission’s (ALRC) ‘legislative heirachy’. Referring to the complexit of the Corporations act the FPA says “financial advice provisions should be clearly separated for relevant providers and AFS licensees, either in separate rulebooks or distinct chapters within a combined Financial Advice Rulebook”. “This would help planners to be able to understand the obligations licensees are responsible for, versus the requirements that they, as practitioners, are responsible for, and vice versa,” they explained.?“As noted by this review and many others, the current regulatory environment for the provision of financial advice is excessively complex”.
2. In what should be a positive move for first home buyers, the amendment to the Downsizer contribution eligibility criteria passed both houses of Parliament this week. Under the change, which will commence from 1 January 2023, the minimum age to be eligible to make a downsizer contribution will be reduced from 60 to 55. The change seeks to incentivise retirees into moving out of larger homes, freeing up supply for those seeking to enter the property market. While positive step, the change alone will likely have minimal impact with stamp duty remaining a key hurdle for many.
3. Sticking with the property theme, the Reserve Bank of Australia this week delivered another rate hike of 25 basis points. The change took the cash rate to 3.10 per cent and marks a significant slowdown from the increases predicted by many earlier this year. Bond yields have fallen from above 4 per cent just a few weeks ago to around 3.3 per cent today as investors reconsider the outlook for the economy and the RBA takes a pause as it waits to understand the impact of the aggressive policy changes to date. This comes amid a backdrop of historically poor performance of residential property prices, with Brisbane among the worst performing, down several months in a row with more pain to come as the ‘maturity wall’ of fixed rate mortgages rolls in 2023.
4. The Stockbrokers and Investment Advisers Association, outspoken on many issues related to FASEA and the Quality of Advice Review, offered feedback to the ALRC’s own interim report. The industry body has recommended that the Rules Advisory Committee, which will be consulted before new regulations are created, exclude consumer advisory groups from its membership.?The SIAA highlighted the impact that consumer group input had on the financial advice regulations, which are seen to be ‘one size fits all’ and had in some cases been to the “detriment of both those providing and seeking advice”.?
5. Similar issues have been raised by the Financial Services Council (FSC) who responded to the same report by suggesting that further law-making power should not be delegated to ASIC. They warn of giving ASIC ‘excessive’ power in doing so with the only oversight potentially coming from Parliament if implemented. ASIC is both a lawmaker and regulator, but with the former focused around dealing with the specific detail of legislation not specifically dealing with public “policy”. They suggest more stringent guardrails in the creation of legislation but note that “even if they are put in place, the FSC has concerns that in practice these boundaries and guardrails will not be effectively enforced”